Visant Corp. Announces Sale of Phoenix Color for $90M to ALJ Regional Holdings

NEW YORK—July 14, 2015—ALJ Regional Holdings (OTC Markets: ALJJ) has announced that it has entered into a purchase agreement to acquire all of the outstanding capital stock of Phoenix Color from Visant Corp. Phoenix Color is a leading manufacturer of book components, educational materials and related products with over 30 years of print experience, and has reported a $88 million in revenue for the 12 months ended March 31, 2015. Drawing on a broad spectrum of materials and decorative technologies, Phoenix Color produces memorable, value-added components, heavily illustrated books and specialty commercial products. The acquisition is scheduled to close no later than Oct. 5, 2015, subject to customary closing conditions, including the receipt of debt financing and applicable consents and approvals.

The acquisition expands ALJ's revenue from $190 million to $278 million, expands ALJ's EBITDA from $18.9 million to $41.8 million and, together with the other transactions, increases EPS from $0.45 to $0.66 on a pro forma basis for the twelve months ended March 31, 2015. 

"Phoenix Color has been servicing the publishing industry within the United States for over 30 years and has formed lasting relationships with some of the biggest names in book publishing," said Jess Ravich, ALJ's executive chairman. "In addition, it is either the #1 or #2 market leader in the primary categories in which it competes. We are excited to add Phoenix Color to our family of market-leading companies under ALJ." ALJ currently owns Faneuil Inc. and Floors-N-More, dba Carpets N' More.

The aggregate consideration for the acquisition, subject to certain closing adjustments, will be $90 million. ALJ expects to enter into a $95 million term loan and a $30 million revolver with Cerberus Business Finance. The proceeds of such facility together with the proceeds from the sale of ALJ stock described below will be used to fund the acquisition and refinance the outstanding obligations of ALJ, Faneuil and Carpets and to provide working capital facilities to all three of ALJ's subsidiaries.

ALJ also announced that Marc Reisch, the chairman, president and CEO of Visant, has purchased 400,000 shares of common stock of ALJ in a private placement for an aggregate consideration of $1,520,000. Upon the closing of the acquisition, Reisch will become chairman of Phoenix Color and a member of the board of directors of ALJ. "I am excited to continue my involvement with Phoenix Color, as well as to be joining the ALJ board. I look forward to working with the members of the Board to continue to grow ALJ's family of companies," noted Reisch. John Carbone, the current president of Phoenix Color, will remain as the president of Phoenix Color.

ALJ also announced that Anna Van Buren, the CEO of Faneuil, and Tarsha Leherr, the vice president of operations of Faneuil, exchanged their 32,857 and 3,286 shares of common stock of Faneuil, respectively, for 1,500,000 shares and 150,000 shares of common stock of ALJ, respectively, using an exchange ratio of 45.65 shares of ALJ common stock for each share of Faneuil common stock. On a pro forma basis assuming that this exchange had occurred onApril 1, 2014, ALJ's consolidated EPS, fully diluted, for the 12 months ended March 31, 2015 would not have changed. Also on July 10, 2015, Ms. Van Buren entered into an amended and restated employment agreement with Faneuil and waived her option to purchase 60,000 shares of Faneuil's common stock.

ALJ also announced that Steve Chesin, the CEO of Carpets, exchanged his 750,000 Class B Preferred Units with a preference amount equal to $750,000, 75,000 Common Units and 40,000 Equity Award Units of Carpets for 150,000 shares of common stock of ALJ. On a proforma basis assuming that this exchange had occurred on April 1, 2014, ALJ's consolidated EPS, fully diluted, for the 12 months ended March 31, 2015 would have decreased by approximately $0.02.

As a result of these three exchanges, ALJ now owns 100 percent of each of its subsidiaries. "Having Anna, Steve and Tarsha exchange their interests in our subsidiaries for shares in ALJ plus having Marc become a significant stockholder in ALJ is extremely positive for our company as now all of our executive officers are fully aligned with our stockholders," continued Ravich.

Since March 31, 2015, ALJ has repurchased 176,383 shares of its common stock under its repurchase program at an average price per share of $3.83.

Taking into account all of the above transactions, on a pro forma basis and subject to the finalization of the opening balance sheet, had we acquired Phoenix Color and consummated all of the above transactions on April 1, 2014, ALJ's consolidated EPS, fully diluted, for the 12 months ended March 31, 2015 would have increased by approximately $0.20 from $0.46 to $0.66.

ALJ was advised by Shearman & Sterling LLP in these transactions. Visant Corp. was advised by Houlihan Lokey, its financial advisor, and Simpson Thacher & Bartlett LLP, its legal counsel. Cerberus Business Finance was advised by Schulte Roth & Zabel LLP.

About ALJ Regional Holdings
ALJ Regional Holdings is the parent company of Faneuil Inc., a leading provider of business process outsourcing and co-sourced services to both commercial and government entities in the healthcare, utility, toll and transportation industries; Floors-N-More, dba Carpets N' More, one of the largest floor covering retailers in Las Vegas and a provider of multiple finishing products for commercial, retail and home builder markets including all types of flooring, countertops, cabinets, window coverings and garage/closet organizers, with five retail locations; and, upon the closing of the acquisition discussed above, Phoenix Color, a premier full-service and full-color printer utilizing a broad spectrum of materials and decorative technologies to produce memorable, value-added components, heavily illustrated books and specialty commercial products.

Source: ALJ Regional Holdings.